SPY408.26+8.17 2.04%
DIA327.10+4.20 1.30%
IXIC11,984.52+321.73 2.76%

GLOBAL LNG-Asia prices down as soft demand and ample European supply continues

GLOBAL LNG-Asia prices down as soft demand and ample European supply continues

reuters.com · 04/29/2022 07:17
GLOBAL LNG-Asia prices down as soft demand and ample European supply continues

By Marwa Rashad

- Asian spot liquefied natural gas (LNG) prices were down at the end of this week, after rising briefly earlier this week, on a Russian supply halt to Poland and Bulgaria, as Asian import demand slumped.

The average LNG price for June delivery into north-east Asia LNG-AS was estimated at $23.50 per metric million British thermal units (mmBtu), down $1.90, or 7.5% from the previous week, industry sources said.

Earlier this week, Russia's Gazprom GAZP.MM stopped gas supply to Poland and Bulgaria for refusing to pay for gas via its new payment mechanism, sending European gas prices higher and causing LNG spot prices at Platts' Japan-Korea-Marker to jump. nL2N2WP0EO

Alex Froley, LNG analyst at data intelligence firm ICIS, said that although prices picked up this week, they didn’t rise to the levels seen in March when war broke out in Ukraine, or when there were fears about winter demand in December.

"Three European countries have now stopped receiving Russian gas. Lithuania voluntarily stopped purchases while Russia has cut the supplies to Poland and Bulgaria. This will increase spot LNG demand in the region," said Froley said.

"However, it shouldn’t add too much extra strain on the market at this stage as we are now in the shoulder season between winter and summer demand peaks, while China may free up some cargoes for sale elsewhere as lockdowns slow economic activity," he added.

Refinitiv analysts said prices are expected to be capped around the mid $20’s/MMBtu range as demand from North Asia remains quiet on the back of higher inventory levels in Japan and ongoing Covid-19 related lockdowns in China.

In Europe, the continent reached a new record for LNG imports in April, breaking January's levels that exceeded 10 million tonnes, according to Refinitiv data.

As of April 28, Europe has imported 12 million tonnes of LNG with about 7.3 million tonnes headed to Northwest Europe: Britain, France, Netherlands and Belgium.

On the other hand, Asia's imports are forecast at 20.55 million tonnes in April, which would be the lowest since June 2020, according to data intelligence firm Kpler. China's share is expected at around 4.56 million tonnes, which would be the weakest since October 2019. nL2N2WQ0A1

Spark Commodities index for Northwest Europe (Spark NWE), which assesses LNG shipped to Europe on a delivery ex-ship basis (DES) as a differential to the TTF price, hit a record of $7.455/mmBtu discount to the TTF price.

"The assessment of -$7.455 for May 2022 means that NWE DES LNG is assessed at a $7.455/mmBtu discount to the TTF for LNG deliveries into north-west Europe in May," said Henry Bennett at Spark Commodities.

"This differential is at a record discount and is driven by the large volumes of LNG directed at north-west Europe combined with the limited import capacity," he added.

(Reporting by Marwa Rashad; Editing by Nina Chestney)

((marwa.rashad@thomsonreuters.com; +447823669044; Reuters Messaging: marwa.rashad.thomsonreuters.com@reuters.net))